What it Really Takes and How Much it Costs to Create an App

You’ve got a great idea for an app. Like really great. Maybe even the next Snapchat.

You know the idea is brilliant, but you’ve got zero idea what type of investment you need to get it off the ground.

But come on, with 2 million apps available in the Apple and Android stores, surely it can’t be that hard.

You’ve read the newspaper headlines “19-year-old builds app in his dorm room, now runs a Silicon Valley powerhouse!”, or “Couple sell app for $10M! Start brand new life on tropical island and spend days eating squid and riding quad bikes!” That could be you, right?

After all, you love tech, you’re full of great ideas, and the “Appreneur” lifestyle is totally you. But how much cash do you need? And how the heck do you actually get started?

You are me exactly 12 months ago.

After 10 years of desperately wanting to start my own business, I had a great idea for an app that I knew would help thousands of people make money using Instagram. I had no app experience, but a gangbusters startup mentality, hyperactive amounts of passion, a little extra cash in my pocket, and a ridiculously optimistic attitude.

Through my research, I found that apps with small functionality can be built from $20,000 and those with much heavier functionality can reach over $200,000. WOAH. Way more expensive than I thought. I weighed all the pros and cons and came to a conclusion: $20,000 for a business that I get full control over and get to build myself? I decided to go for it.

Of course, everyone’s experience is going to be different. In execution, costs can vary wildly, and a lot of it depends on your own personal skills and connections. But I thought it would be useful to walk through my experience—as someone who dove head first into building software with practically no experience—to offer detailed information and bits of insight I wish I had known before getting started. These are all the real figures that I personally experienced in my first app-building undertaking.

I hope you find it useful as you take on your own entrepreneurial adventure!

FIRST THING TO CONSIDER:

Question 1: Are you going to go gung-ho and throw your entire weight behind your app? OR, are you going to build a barebones, super-simple version of your idea (a Minimum Viable Product, or MVP) and try pitching for full funding and investment to fully build out your idea later?

To decide between the two, you might assess if you’re likely to turn a profit straight away, how much money you have for scalability after launch, or how confident you are at asking friends or family (angel investors) if they’ll join you when things get tough.

If your idea is world domination and you’ve got few funds, you might be heading down the MVP route, and you will need to prove to investors later that they’d be making a good decision on your business (it’s very rare to get an investor on board at the idea phase).

Alternatively, if you are confident the product and market is—in Guy Kawasaki’s words, valuable, viable and validated already—and you have some money up your sleeve, going all-in could be perfect.

Whichever you choose, both options need to be able to handle everything your users throw at it. I’ll explain later how unexpected popularity and user habits tripped me up and wildly drove up the cost of the app.

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WHAT COSTS SHOULD YOU INITIALLY BUDGET FOR?

If you ask an app developer how much an app costs, you’re likely to hear the “How long is a piece of string?” response, or something similar. And that’s accurate. App projects have unlimited scope and functionality.

To work out your project’s scope and cost, your next big decision is:

Question 2:Are you going to build your app for iOS or Android users, or both?

This is what I found: Each has a different programming language, so you’re going to need a different developer for each. If you’re not coming from a development background, you might also need a technical project manager to decipher the language that developers speak.

I decided to build both, because: ridiculously optimistic.

In hindsight, I should’ve started with iOS and then determined if there was enough demand for Android among my audience. However, the advice I was given at the time was different.

Everyone told me how big Android was getting and that it was potentially easier to build, but I should’ve really researched my audience, because it turns out 85% are on iOS. The costs of building and supporting both platforms before truly proving demand can be incredibly high.

Question 3: How much do features really cost and what other costs are involved?

My app had very few initial features, no API (integration into other software), only a couple of screens, and a rough timeline of three or four months to complete both Apple and Android versions. In the world of apps, mine was considered fairly simple. After six different quotes, here are the costs I budgeted for:

DESIGN: $1,500

APP WEBSITE: $2,500

GLOBAL TRADEMARKS + SETTING UP COMPANY + ACCOUNTING:

$3,000

DEVELOPMENT: 4 months

$3,500 p/month Android

$3,500 p/month iOS

(Total: $28,000)

OPTIMISTIC BUDGET: $35k

Yep, before I started my budget was already stretched $15,000 more than what I thought I originally needed.

Like in all Startups, Nothing Will Go Smoothly

App building is a crash course in the ins and outs of software creation, and you might catch yourself a few months later shoveling cash into the mouth of a monster.

Bugs, developers going off task, testing, and UI/UX challenges can quickly blow out your timeline by months. In fact, during the frustrating development phase, my estimated timeline of 3-4 months quickly became 8-9 months. I learned the hard way this is quite normal in app-land and the cost of mine climbed.

This is why, if you are going to build an app, I suggest getting a mentor who has “been there before.” This will help you work with your developer on delivery milestones if things go awry, so there is adequate reasoning behind and response to the blowout—including detailed timesheets of what your developers are spending their time on—to protect your budget.

That way, you’ll be able to make an informed decision as to whether your idea is still worth pursuing, and whether it’s time to seek funding earlier.

Or you could just borrow on your mortgage, like I did.

Be Ready for Curveballs, and Set Cash Aside for the Unknown

After you’ve started building an app, you’ll soon become familiar with “The Curveball” and you’ll need to start budgeting for when they hit.

Just when you think you’ve handled everything like a champ, you’ll get body slammed so hard the wind gets knocked out of you. That’s The Curveball.

For example: Discovering I needed to rebuild an entire piece of the app because Apple users hoard over 10,000 images on their phones, crashing my app and requiring an extra 2-3 months of development.

Or how’s this for a Curveball: Rebuilding the entire app after launching.

One week after launch, my development team let me know they had didn’t have the resources to handle the popularity the app was seeing.

Ok, seemingly good news. But with no one to service the bugs not seen in testing, no one available to add the list of features remaining, and user complaints filling my inbox, I had to make a heartbreaking decision to completely move teams. On finally finding, negotiating, signing, and migrating all my systems over to the new team, we discovered that for the vision I had, the code had to be completely re-built and pushed out under the guise of an “update.” Additional cost, $8,000 Apple, $7,000 Android.

You could get a few of these. For example, I’ve purposely left out the costs of a trademark infringement, resulting in an entire rebrand, $7,500 additional cost, and 10 days of living in a state of delirium while questioning the meaning of life.

The lesson: You really can’t know everything that will happen as you embark on this journey. The only certainty in the app startup world is uncertainty. Plan for it financially and mentally so you don’t turn into a zombie when things take a turn.

Like Building a House, Multiply Everything by Three

Here is a very transparent view into my costs, from idea to launch. Including re-builds, The Curveballs, mistakes and delays, the cost from idea to launch was….close to $70,000.

That could buy a lot of pizza, a very fancy car, a trip around the world, or if I didn’t live in Sydney it might even be a house deposit.

This figure doesn’t include paying myself a salary either, despite working approximately 100-hour weeks. And trust me, when you are living on no sleep, no amount of motivational quotes on Instagram help.

That’s not to say that your expenses won’t be worth it in the end. After all, this is an investment in your business, and nobody said it would be easy. But you should be ready for higher expenses than you might expect. If you don’t spend that money, buy yourself pizza.

How to Avoid My Mistakes and Cut Your Own Costs

Asmentioned,my app was re-started three times with three different development teams and this definitely increased my costs.

It would have been different had I not had to change teams, and I possibly could have avoided this by spending more time looking at the portfolio of the developers or asking for more personal referrals, rather than my gung-ho, “OMG I just want to get this made” approach.

I used an outsourced international team without any help during the first build. Heck, I thought I was smart enough and this would be a walk in the park. But I didn’t even get past the design phase with this team.

Then I agreed to partner with a new web/app agency, leaving my corporate advertising job behind and instead offering to pay using my skills and time.

Truth be told, I wish I had paid with cash. It seemed like a smart idea but trading time and skills can get tricky. You might find out it is cleaner just to stick to your day job and pay.

The lesson here is, resist the temptation to try and cut corners or get too creative when you’re hiring your team. Put a lot of time and caution into this step, and it will save you loads of time, and money, later.

The Secret Cost of Building Traction After Launch

Huzzaaahh!

Your app is live in the App Store, you’ve done it! Your idea has come to life! But what happens now? In my opinion, the next steps and expenses probably make up the most important part of app building. Also known as the traction, or growth phase, getting users to adopt your app doesn’t come for free. Whether it’s cash, staff or time, there are expenses involved.

It will differ for everyone, but here is the breakdown of my current ongoing costs during this phase.

Monthly operating costs, 5 months after launch:

PRODUCT DEVELOPMENT

Ongoing development costs (iOS + Android) $2,200

Bug management + customer feedback dashboard $150

Server $25

BUSINESS

Website, emails, hosting and Gsuite, $25

Accounting, phone bills and Internet $330

TRACTION

MailChimp email services $30

Masterminds/Mentors + online education $300

Virtual Assistants $900

OngoingMonthly Costs USD $3,960

There are also other tasks I currently undertake myself:

Currently work from home

CTO and management of development team

Continual optimization of app UI/UX design

Marketing/PR/Partnerships Manager

Social Media and Community Management

Blog writing

Customer service

Graphic design

Personal Sacrifice

Building an app is no get-rich-quick scheme. You’ll soon discover how much money and time it requires. Around 90% of apps never make it to the app stores featured page, and you certainly never hear of the failures.

Be prepared for the amount of time you will need to spend, or think early about co-founders or development partners. Only 1% of apps go viral, and that either means you’ll have to spend a lot of money on publicity, or look down an incredibly hard road of hustling.

You’ll probably not earn any money upon launch, you might put on a few pounds, and you will wonder what happened to your time at the beach, and this mythical work/life balance thing you’ve heard of.

Buckle up for something like a 12-month road ahead, which means whatever you’re planning, make sure you LOVE your idea, LOVE your audience, and LOVE challenges!

The Final Tally

So, how much did it cost? Drum roll…

After 12 months of building, re-building, learning and growth, my total spent comes in around the $95,000 mark. Ouch.

Speaking with a few software founders, I’ve learned the $100,000 mark for a startup (not MVP) is fairly common. So if you’re going to bootstrap, an app can be quite the investment.

“After helping many App Founders from pre-launch through growth phase, it’s not unusual for a new business to cost over $100k in its first year. That’s why it’s important to focus on traction and product/market fit immediately so you can grow revenue ASAP.” Dominic Coryell – Founder, GimmeGrowth.com

Are You Up For It?

I don’t bring up these numbers and the nuts and bolts of my own story to scare you away, or to make entrepreneurship sound like a nightmare. But we often get caught up in the excitement and the glamour, without meditating on the slog.

So I’d encourage you to read these numbers. Let them sink in. And before you do anything, ask yourself, “How much am I willing to put in?”

If you’re thinking, “I’m going to give it EVERYTHING!”, then tally ho! Your great idea could be the best thing that happened to you!

Before you even spend $1, research the heck out of your audience, your target market, the problems you’ll encounter, and how you can get in front of them.

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KEY TAKEAWAY:

If you’re completely new to app building, or software, finding your technical partner is going to be the biggest decision of them all, and not just for the expenses.

Take this part of the journey incredibly seriously, think about it as though you’re about to get married to this person—you need to be able to communicate well and speak truthfully. I cannot stress enough. Referral, referral, referral.

And if you’re truly ready to join this crazy club of app builders, go for it, and best of luck!

Was there anything that surprised you about the cost of building an app, or any questions you still have that have been left unanswered?

Christy Laurence is the Founder of Plann, a multi-award winning app that helps brand, strategize and schedule Instagram posts in advance. She's also just been crowned as the 2016 Australiasian Startup Founder of the Year at Sydney’s StartCon event. Connect with Christy on Instagram and follow her startup journey on Facebook Facebook.

Beeing an app developer I really like this story, as it relates to what I constantly see with my clients and prospects. Getting a mentor is a great advice, maybe even hiring another app developer as kind of ‘CTO for Hire’ who will just make sure the app is beeing built correctly. One thing that I would add is that building single platform at a time is also a big cost saver, as it’s much cheaper to port functionality once everything is settled than to develop concurrently. I did this with one of my recent projects and it was 90% just copying code from iOS to Android.

A great read, since my first exposure to personal apps using my recordings in 2008 it was a digital medium that was stored away in my things to do tray. Since 2012 I began to see more guests using apps in my accommodation business and developing them also. So the idea began to be explored in earnest. The result was developing and publishing my first mobile App in July 2016. Now with a total of 4 published to iTunes and Google Store ans several more in development. As you described it is a lot of work. Development time for me was 600 hours plus to get the first one completed. It is very satisfying no matter what all of the effort is worthwhile. What is especially great is to come across your words and get a valuable bit of advice for the traction, or growth phase, that I am currently working on. Kind Regards Geoff

Every Entrepreneur knows that an idea must have affiliates to cater to. Thus, establishing a marketing strategy for future sales (selling the App). It’s understood that you were willing to die for your phenomenal app, but realistically, your decisions could’ve been cut in half saving you tons of money. Next time, try and find a company willing to listen and if they’d buy an app that patronize their business needs. Or grab some new business and ask them if they would consider a new concept and with no obligation to you (since this is a new career path for you) to do them a business favor. After you finish the App, present it to them and allow them to give you feed back on a new app that you’ve constructed for them since it’s free for them. I bet you once you’ve finished the App, they’ll have other affiliates (from their business associations) banging on your door to build them an App. This is where you’ll break record sales on a Universal App that only your savvy can tackle without any business nudging in.

I am so thankful to have come across your story. What you have done it amazing, allowing us crazy enough to explore and conquer this new wave mobile app world understand some key pieces of the unknown. I am in the beginning phases of bringing my app to life. This 1 read has given me insight and also inspired me to continue on this journey. Thank you, Thank you, Thank you!!

Quite a comprehensive read. I don’t know whether or not I got lucky but I paid no where near this amount for my app, it paid for itself in the first 12 months and the ongoing costs are really nothing. I built website for it myself with a video and information about it, write a blog about it and most of my sales have come through posting on Social Media. I suppose my intentions behind my app were not for it to go huge, but for the user to get what they want out of it, which from feedback, they do. Thanks for the resource though!

Quite a comprehensive read. I don’t know whether or not I got lucky but I paid no where near this amount for my app, it paid for itself in the first 12 months and the ongoing costs are really nothing. I built website for it myself with a video and information about it, write a blog about it and most of my sales have come through posting on Social Media. I suppose my intentions behind my app were not for it to go huge, but for the user to get what they want out of it, which from feedback, they do. Thanks for the resource though!

I haven’t heard of that but it sounds like a great simile, I did read once that it’s like drawing a line on a map but you can’t go as the crow flies – the map doesn’t show you road closures, washed out gullies and broken bridges. I feel like we could write a book here!

Thanks Suz, I’ve always wanted to be one of those really transparent founders about what really goes on in hope it helps others – I’m thrilled you found it interesting. The next story to tell is how I ended up with that money to spend in the first place! 🙂 x

Claire! Thank you! Here’s hoping I will be able to pay it off one day hahaha. 🙂 Best way to track me down is on Instagram (currently had a few days off after damaging my wrist from too much testing – whoops!) 😀

WOW! Christy, this article was written for me!! I am about to embark on this adventure from beginning to absolute success. I have to ask, I would love to be your mentee or have you as an advisor. Any chance of that happening? **pretty please!!!

Hi Tosin! I’m thrilled you found it useful! I do provide affordable mentoring as another way to help pay for my development costs! My email is supplied just up in my bio, do you want to drop me an email and we can chat?

Hey Tosin, I have also been through this journey, and got burnt off shore the first time. Second time around, we built a development team based half in Australia, and half overseas, except we flew over there to hand pick them.

After the launch of 2 successful apps, we have decided to move into affordable app development for people, using the team of 8 we have put together.

We can do it for offshore prices, with Australian designers, developers, and project managers, for cheaper than anywhere in Australia, on a fixed time and cost contract.

Couldn’t agree more. Have you also heard about the coastal paradox in software estimation? Basically the idea is: like measuring a coastal line, the shorter the ruler you use, the longer the coastline, which yields a more accurate measurement. Same with estimating software costs and time. And congrats on making it!

There is also the problem that developers are an optimistic bunch who will give you a best case scenario estimate. In the book ‘The Mythical Man Month’ Fred Brooks suggests taking a developers estimate and multiplying it by 6 to get quality software.

The breakdown for the total estimate is as follows: 1/3 planning 1/6 coding 1/4 component test and early system test 1/4 system test, all components in hand.

Sure you can get an app done in 3 months. And you can get ongoing updates cheap. But in 2 years when you want to make a major change you might be hit with a huge rewrite and them many regression error because you the app was developed badly and there is no unit tests.

Wow, I can hear your heartbreak. Definitely a hard lesson but I am right thinking you would’ve spent the next few years wondering ‘what if?’ if you had never tried? Hopefully you have many many MANY learnings for your next adventure and I wish you all the best !

What, what a story! Thank you for sharing! I definitely hear you the amount of times I’ve thought about giving up is real – and without a technical background things can take much longer than you can handle.

I can’t imagine what you must have learned during that 12 months, there are some days where I think mine will explode. Would you ever do it again?

Giving up was probably the hardest part. We put a lot of effort into finding a developer who could pick up where our last first one left off but we had trouble finding someone who could understand the source code.

It was written in “Air”? I think that’s what it was called. Basically a language you can write in to publish to both iOS and Android. We didn’t use “native” code.

That was another mistake we made. And I want to echo your sentiment of going iOS first. 95%+ of our users were iOS. So writing in that special language was dually detrimental for us. No one understood it and Android was a small part of our audience.

Would I do it again? Yes.

BUT only if I validated my idea by having other people pay for the development because it solves their painful problem.

The only thing I’d ask people to do before diving into ANY idea is extensive immersion. Find out if you’re solving a painful problem. Literally ask people who have the problem how painful it is and if they’d pay for a solution. Then have them pay for you to develop it. A great teacher on this immersion is Bryan Harris of Videofruit or Andy from thefoundation

A good friend and I developed an app back in 2012 after Words With Friends sold for $1B.

Needed a piece of that pie.

It was NOT a piece of cake. We ended up hiring a college student as our developer as neither of us had a technical background. We worked him to the bone and after we launched, the bugs and customer complaints ended up being the straw that broke the camels back.

He left us high and dry. And with good reason. Unfortunately, we were unable to pick up the pieces. We listed the app on a website (think ebay for apps) and ate our losses.

We hit 15K downloads in 14 days.. traction was real.

It took one year to develop. It would have taken another year to refine. Worst part: OMG POP (words wf developer) came out with an identical game a few months after we gave up. Salt in the wound.

All in all. A great learning experience. Wish we had the gusto to see it through.

This is so amazing. The breakdown is quite insightful. I feel like making a video of myself reading the content of this page (from the URL to the comments) to my online audience. Besides, I’m sharing it right away. I absolutely love this. Thanks a bunch…

I love that someone laid this out in case study format! I have a software development company and it isn’t uncommon for people to minimize the effort involved. A large portion of the first budget you mentioned would go toward services of a company like I have and most people, I believe, would expect to get all of what you outlined for maybe 10k, tops. 30k (minute the website) is 3 times that (of course).

Thanks Eric, an app is definitely a huge undertaking – MUCH bigger than what I ever imagined! I think it’s because people genuinely don’t know, and in my case I didn’t really know anyone who had built an app before to ask either. Best of luck with your company!

Hi Christy, actually my story was a lot worse than yours. I spent more than double the money, time and endeded up broke with no more money to continue and unfortunately I had to leave it to that. It was my absolute worst mistake I made in my life and I have definetely learnt a lession … a very hard one.

The only thing I’d ask people to do before diving into ANY idea is extensive immersion. Find out if you’re solving a painful problem. Literally ask people who have the problem how painful it is and if they’d pay for a solution. Then have them pay for you to develop it. A great teacher on this immersion is Bryan Harris of Videofruit or Andy from thefoundation

A good friend and I developed an app back in 2012 after Words With Friends sold for $1B.

Needed a piece of that pie.

It was NOT a piece of cake. We ended up hiring a college student as our developer as neither of us had a technical background. We worked him to the bone and after we launched, the bugs and customer complaints ended up being the straw that broke the camels back.

He left us high and dry. And with good reason. Unfortunately, we were unable to pick up the pieces. We listed the app on a website (think ebay for apps) and ate our losses.

We hit 15K downloads in 14 days.. traction was real.

It took one year to develop. It would have taken another year to refine. Worst part: OMG POP (words wf developer) came out with an identical game a few months after we gave up. Salt in the wound.

All in all. A great learning experience. Wish we had the gusto to see it through.